Auditing Thru tally! Some Useful Techniques

Audit thru tally! Some useful techniques.

Today no one worries about tallying the accounts. The technology blessed accounting application softwares like tally have made the job of tallying easier, faster and accurate. Though the quantitative numbers are taken care of, the most important thing is the qualitative factors of accounting. These can be ensured by the same technology and these needs to be effectively utilized by the auditors. Some techniques are suggested below;



Security and Confidentiality of accounting data
Like in the manual system, the books of accounts were kept under lock and supervision, in the computerized system, there should be user names and passwords to open and modify accounts. In fact, in the latest versions of the software, different levels of users and access controls can be defined.



Built-in Audit Feature
First of all, the built-in audit feature (Tally audit feature in Tally) should be enabled when the company is created. However, even later, the tally audit feature can be enabled. (Gateway of Tally Alt+F3 Alter Select the Company Set to yes the concerned part).



By enabling the Tally Audit feature, an auditor can track changes in the accounts following his previous review. Two types of changes are important, which can be identified by enabling this feature changes in transactions or vouchers and changes in ledger masters.



You can view the List of new or modified vouchers. Even, the details like, entered by whom and / or altered by who will be shown. It is left to the administrator or auditor to accept or reject the changes.

You can also view the list of new or modified ledger accounts and review it and accept or reject the changes.



If he is satisfied with the authenticity of the changes, he accepts the appropriate changes by pressing F7 or all of them by pressing Alt+F7. Once the changes are accepted, they are removed from the audit list and would not be available again.



The audit lists can be viewed by following the path given hereunder; (Gateway of Tally Display Statement of Accounts Tally Audit)



Ratio Analysis
The most important and most effective technique of audit is the ratio analysis to ensure the reasonability of the accounting. For instance, exorbitant or unusual gross profit ratio or net profit ratio could indicate the incorrect classification of the expenses as direct and indirect. Similarly other ratios can be analyzed and compared with the expected norms and standards for the company concerned. (Gateway of Tally Ratio analysis)



Check the configurations
It is possible that the options in configurations may have been changed for the accounting conveniences but which are unwarranted. For instance, the configuration of the voucher entries may be changed to allow cash/ bank in the journal vouchers. But it is most undesirable, because, the type of voucher may not truly reflect the nature of transaction. (Gateway of tally F 12)



List of Ledger Accounts & Stock items
First of all identify the list of ledger accounts and stock items and the group in which they are grouped so as to represent the nature of accounts appropriately in the final statements like balance Sheet and Profit and loss accounts.

Extracting customized reports
Tally comes with the user-friendliness to spool any type of report with any sets of conditions. Alt + F12 i.e. Range Button is an auditors favorite tool to extract the reports. For instance, in the cash book, the cash payments exceeding Rs.20000/- can be easily extracted; vouchers having narration containing XXX can be spooled easily; and others depending on your query can be easily extracted. (Wherever possible, Alt + F12)



A particular ledger account or the balance sheet or the profit and loss account can be viewed in the columnar form - monthly, weekly or yearly, etc. and the comparison and trend analysis can be done very easily and quickly.

Cash Entries authenticity
One can go in the cash book and display for each day, the total debits, total credits and the closing balance. Such report can then be reviewed for verifying whether any negative balance exists on any day. At any cost, the Cash balance cannot be negative. (Cash book ledger view F6)



Bank Reconciliation Statement
The Bank Account (Ledger account display) can be used to reconcile the bank book with the banks statement of accounts in the accounting application program itself.



Sorting Data
The ledger account when viewed, the transactions are by default sorted chronologically, but they can be sorted even amount wise or ledger name wise, so as to ease your search of data. For instance, you may like to sort the data amount wise, descending and vouch in detail only the huge amounts first and those concerning small value in the next priority. (F 12 options)



While viewing some reports, like balance sheet or profit and loss account, the percentages option can be used to efficiently analyze the data and make expert judgments. (F 12 options)



Stock related reports for review
Movement analysis reports can be extracted. (Gateway of Tally Display Inventory Books Movement Analysis)

Details of Purchase Bills pending can be extracted including the quantity, rate and value

Details of Sales Bills pending including the quantity, rate and value

The Stock Summary can be reviewed for identifying negative stocks as on any date. (Gateway of Tally Stock Summary)



Exception Reports
One can view the negative Stocks in the stock register

The ledgers showing negative balances can be identified very easily



A list of overdue receivables and overdue payables can be extracted. The Aging analysis of the stocks, debtors and creditors can be done at the touch of the button, instead of breaking heads for long hours.



(Gateway of Tally Display Exception Reports Concerned report)

Exporting Data
The latest versions of the software come with the option of exporting the desired data in the desired format, namely excel, word, html, pure text, etc. very easily. For instance, the specified ledger account can be exported to excel and the calculations and filters used on them. Adding to it, the ledger accounts can be viewed in the columnar form and then exported if so desired to have cross verifications easy.





There may be many more and effective audit techniques thru tally, which can be known by the practice and experience one has with the application software. Technology being an enabler, it must be tried to be utilized to its optimum level. Since, accounting has shifted hands from manual to computerized systems, it is high time for auditing to follow suit.





------------- Sanjay Kadel, Chartered Accountant